The following is the unofficial transcript of a CNBC EXCLUSIVE interview with P&G CEO David Taylor and CNBC’s Sara Eisen which aired on “Squawk on the Street” (M-F 9AM – 11AM) today, Friday, November 9th. The following is a link to video of the interview on CNBC.com:

Get Our Activist Investing Case Study!

Get the entire 10-part series on our in-depth study on activist investing in PDF. Save it to your desktop, read it on your tablet, or print it out to read anywhere! Sign up below!

DAVID TAYLOR: It's a very significant move in the direction we have been moving. You know, two years ago at CAGNY, I think it was February ’16, I talked about moving more in the big markets starting with the U.S. in an end-to-end format to make sure our businesses went all the way to the customer. The same time we talked about in some of the smaller markets having something called “freedom within a framework,” so it would be more agile in small markets. This takes it to the next big step. And at the same time it changes some other things about how we staff and manage talent to reinforce this choice, to make sure we're more agile, accountable, and able to win in both big markets and in smaller more volatile markets.

SARA EISEN: So does this mean you're listening to your new board member, Nelson Peltz?

TAYLOR: I listen to all my board members. And then we start with listening to the consumer. But we also, as we lead the organizational change we did certainly consult with all 12 of our external board members. And we have a very active and engaged board. And they've been active and engaged. But certainly any good ideas we’ll take. I don't care where they come. If it allows us to grow faster, that's a good thing.

EISEN: Do you have any regrets about the way that the company approached that proxy fight, and fought so hard against him joining?

TAYLOR: No, because I think it was important that we established what we believe was right. P&G is a company about winning over time and we're about doing it the right way. Our purpose, values and principles got everything we do so when one challenges in some areas some things that we didn't think made sense, we thought it made sense to stand up for what was right as we learned more and more and talked as often happens with dialogue we're able to find some common ground and we listen to investors we do believe you listen to your investors and your other stakeholders.

EISEN: You did see the best sales growth in years in the last quarter and investors are trying to figure out with that tough macroeconomic environment just how sustainable it is.

TAYLOR: Yeah to me that the best evidence I can give for sustainability is: look where we were two years ago, last year, and this year. And what you see is a consistent improvement in the number of brands growing, the number of countries that are growing, which says we're doing it a way that is sustainable. It's not by an aggressive promotion in a market or with a customer, it's by this superiority strategy that is really substantive. Better products that are meaningfully better. Not a little bit better so you can make a claim, but better so that if you use the product, the brand and go back to what you're used in before you notice the difference, so you come back. And there's many products here in many brands that really make a difference and if the consumer really loves it and he or she comes back, that's a sustainable approach. We will have to deal with and are dealing with to being in one of the more difficult foreign exchange environments for a U.S. domiciled company. We're dealing with difficulties in commodities because of you know oil prices and others over time -- they've come down recently -- but in general commodity costs are higher in transportation and warehousing. Especially in the U.S. costs are higher.

EISEN: Do you think inflation and the broader economy is gonna be a problem?

TAYLOR: -- There's not a lot of evidence that inflation has grown a lot in the US and it tends to be certain categories where input costs have gone up a good bit. And that's not all categories. And the other thing is over time we will find opportunities through productivity to either offset or to bring innovation where the consumer chooses to buy by the new brand or the new form or whatever delights the consumer more. We watch carefully if the value ratings go down and certainly an aggregate we'll see what happens with inflation. But certainly what we've seen in the US and in many countries, it hasn't gotten ahead of itself. There are certainly some of the more volatile countries where foreign exchange has changed significantly. And we have raised prices significantly, you are seeing some escalating inflation. Certainly places like Argentina in Turkey, two markets we have a meaningful business. That's a very different story than the U.S.

EISEN: No the U.S. -- I mean the consumer environment has been strong. Spending has been strong. Do you see that continuing into next year?

TAYLOR: Certainly. There's no evidence either unemployment or consumer confidence or any other the macro factors that would cause me to lose confidence of the U.S. being a great market to do business in. Right now it's one of the reasons why we're telling all of our category leaders we need to win in the U.S., which is why I take a lot of confidence on the sustainability of the strategy and that we’re growing share -- the past one month, three months, six months and moving now to 12 months in the U.S. Getting it right in our biggest market is a strong statement on the sustainability of the action plan of the strategy.

EISEN: But overall U.S. economy -- feds raising rates. Does that feel appropriate to you?

TAYLOR: Well, they’ve rates certainly a number of times. But the absolute rates still aren't very high by any historical measure. Certainly we're concerned if it gets ahead of itself, that would be a problem. Anything that causes consumer confidence to drop significantly or starts to weigh heavily on the growth rate of the broader economy would concern me.

EISEN: But you're not seeing that?

TAYLOR: Not in a big way. No. Our categories generally -- the 10 categories we do business generally have been pretty stable in the U.S. They are slightly up this year not down so I'm not seeing evidence the categories of which we do business -- these kind of categories are slowing down. And in fact when we bring innovation and we do our job right, we can actually accelerate the growth of the category because the innovation often brings something that may be higher price but better value. And that's true of things like Olay Whips, it's true of Tide Pods, it's true of Discreet Boutique, it's true of Pampers Pure. So, many of these are products that give you either a new form or additional benefits that the consumer is willing to pay a little more for because they provide better value.

EISEN: You think the markets giving you enough credit? And stock is still down this year and underperforming the broader S&P 500.

TAYLOR: You probably know as much as I do, it's very hard to predict short-run what the stock will do and what the market will do. I believe when we consistently deliver top bottom in cash, we'll get appropriately rewarded.

EISEN: And to be fair to Mr. Taylor, the stock actually has had a very good run since May it's up almost 30% and that's on a combination of this very good quarter that they recently announced and the fact that the overall market has turned more defensive, adding up to a pretty flat year, guys, because of the concerns about trade and the strong dollar and slower growth going into the year. But Procter & Gamble has outperformed the broader consumer staples business. And guys, today's moves what they're talking about it's all about supercharging that growth and staying more competitive in an environment where they can't control things, like the strong dollar in the cost inflation and the tariffs which are all impacting this global company gets 60% of its business overseas.

CARL QUINTANILLA: Sara, one thing that they can control is where they put their ad dollars and we know they've made changes to their strategy, focusing on digital media. And they made some updates yesterday right?

EISEN: Yeah, so they're gonna continue to put more money in digital media it's actually something David Taylor and I talked a little bit about. I said, “Does that include Amazon?” “Yes.” Increasing money toward Amazon, I asked about Facebook actually because he mentioned that was one of the places they see a lot of engagement and they are trying to reach a new millennial consumer a lot of these big brands are and I said, “Do any of the privacy scandals worry you or make you reluctant to put money into Facebook for advertising?” He said he watches it pretty closely but no they see they still see it as a place to reach a lot of consumers obviously, with more than 2 billion people on Facebook. Instagram he mentioned. Snapchat. Twitter. So they continue to move those ad dollars there. And yeah I think they're one of the biggest advertisers in the world so that so that clearly matters. And it's part of their whole repositioning of trying to get newer innovations to the consumer faster and to a younger consumer something they talked a lot about it their analyst day yesterday.

MICHAEL SANTOLI: Yes and Sara, was there any sense of changes at all in the relationship between the big retailers? There's always been this kind of sense of a pendulum swinging back and forth where the power sits maybe at times with the supermarket chains, the big retailers, where they can kind of squeeze suppliers like P&G. Is there any change on that front or are they just sort of focused on making sure that their brands just sort of outperform against the competition?

They are focused on the relationship they have with the consumer. And that's a big shift for P&G. I mean part of the problem with a lot of these big companies and the way they were structured before is it was all about the relationship with other businesses and retailers and getting shelf space. But obviously consumers don't shop that way anymore, eCommerce is a huge part of the program. And they've missed out with Dollar Shave Club and Harry’s coming up and taking a lot of market share because the consumer just wasn't shopping the way that they used to. And they've missed out on innovations and the way that they shop. So they're hoping by this structure where the CEO of all the business units are responsible for everything, including product innovations, distributions, bringing them to the market, how quickly, how they market that -- that that will correct some of that. So the focus really is on that direct-to-consumer relationship which is a big shift for P&G. But Mike you know Warren Buffett talks about this all the time retailers have a lot of power squeezing them on margins, on prices. Right now, what Procter and Gamble and Kimberly and all these companies have to do is they're trying to raise prices and pass on these cost increases. It hasn't really happened yet. So we'll see how the retailers and the consumers respond to that. It’s going to be a big story in the second half of the year.

Author: Jacob WolinskyJacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Prior to ValueWalk, Jacob was VP of Business Development at SumZero. Prior to SumZero, Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and three kids in Passaic NJ. -
Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own 2.5 grams of Gold